Re-Configurative Divestments of Foreign Subsidiaries as an Organizational Process

Multinational firms divest foreign subsidiaries to not only eliminate underperforming businesses but also reconfigure subsidiary networks. Although the importance of such re-configurative divestments has been emphasized by previous studies, our knowledge on how firms can effectively manage them is limited. Viewing re-configurative divestments as an organizational process of disentangling and recombining operations related to divested subsidiaries, this study examines factors facilitating them. Our empirical analysis of multinational manufacturers supports the argument that routinization of operations is a key condition for re-configurative divestments. Our analysis also confirms that multinational firms redeploy critical resources to other business units after re-configurative divestments, and the effect is stronger than redeployments following outright divestments. This study contributes to the literature of foreign subsidiary divestments by unpacking organizational processes of re- configurative divestments."